Category: Business plan


Startup Bank

Crazy Bank Idea

A bit of fun for a slow August.  We promise at least 20% Return on Equity (ROE) if you help fund this particular startup bank idea; most established banks are giving 4% to 8% ROE. Internal Rate of Return (IRR) of around 100%. Get in touch if you are interested in learning more about and investing in this or one of our other, perhaps less zany, bank concepts!

  1. We employ some currently unemployed bankers (adding value to the economy).

  2.  We raise £1 billion of equity (fuelling capital flows, perhaps even internationally).

  3.  We use the £1 billion to purchase as much high-grade securities as we can (minus set up costs), paying circa 4-5% coupon (Supporting the Govt/Treasury).

  4.  We use the securities as collateral to borrow £9 billion from the BofE at overnight rate of 0.5% (Providing revenue to the Treasury).

  5.  We buy another £9 billion of securities at similar rates as the first batch. At this rate, we are earning at least £400 million per annum from the interest payments alone.

  6.  We continuously roll the overnight position with the BofE, pledging more of the security pool in collateral if required on margin calls.

  7.  We go public. After costs, the bank is earning at least £200 million a year with a high capital ratio (10% equity-to-debt), and the balance sheet will be clean (all low risk securities). Potential valuation of 20-times earnings: £4 billion. We sell 25% of the company for £1 billion. (Give the man on the street an opportunity to share in our success and realise a return for investors)

  8.  Put the £1 billion raised to good use – go back to Step 3

  9.  When market cap hits £10 billion, sell another 10% of the company for £1 billion. Go back to Step 3 again.

  10.  Expand to US. Fed is lending at 0.25%. Repeat formula.

  11.  Start focusing on PR and social issues, buy branch networks from defunct banks and start making actual loans to retail and corporate consumers (Social, Economic and Cultural good).

  12.  Exit for a ridiculous valuation. Everyone wins! 🙂

Writing a business plan – workshop with students at the London School of Economics

This presentation formed the basis of a business plan workshop with students interested in entrepreneurship at the London School of Economics. January 2014.

Writing a business plan